Commuting to work is a necessary part of employment. Some people take public transportation, which may not always be an option. One of the biggest fears when it comes to considering bankruptcy is losing your vehicle. This could make it impossible to earn a living. There is good news; the courts understand this, so in most cases, you will not lose your vehicle. There are many choices when it comes to filing for bankruptcy, and one of the first choices is which chapter to file.
The Repayment Plan
Chapter 13 is designed to allow you to repay your debts by establishing a repayment plan. It is extremely important that the repayment plan is one that you are able to stick with. The court will take a look at the plan to make sure that it is reasonable considering your income and budget. One thing they will be looking for is large payments on an expensive vehicle. It may be considered a luxury item, and the court may decide that only a portion of the payment will be allowed in your budget.
Bankruptcy isn’t often considered until debt obligations have fallen behind. If you are concerned about your vehicle being repossessed because you are behind on payments, I have good news. Once you file for bankruptcy, the automatic stay goes into effect. If you are filing for bankruptcy and have already lost your vehicle to repossession, we can work together to possibly recover it for you.
The automatic stay is set in place to help buy you time to get your finances in order. As you make a payment plan, one of the requirements to keeping your car will be that you are making your full car payments. Keeping up on your payments will keep you from losing your car. In return, you will be rebuilding your credit at the same time.
For most of us, when we purchase a new vehicle, the second you drive off the dealership parking lot, you owe more than your vehicle is worth. If you have been paying on your car for at least 2 ½ years and you are still upside down on your payments, we will “cram down” some of the remaining debt.
The first step will be to figure out what your car is currently worth. We will work to reduce what you owe to match what the car is worth. This will lower your monthly payments and the remainder of the debt will be converted into unsecured debt. This debt will be forgiven at the end of your repayment plan.
Many people struggle for years with debt. No longer keeping up with your monthly obligations means it is time to take a serious look at filing for bankruptcy. Bankruptcy is designed to help people in your situation get a fresh start. It is time to regain your financial freedom.